The owner of British Airways has announced bumper profits for 2023 on the back of sustained demand for leisure flights, with operating profits doubling year on year and exceeding 2019’s pre-Covid haul.
IAG reported an annual profit of €2.7bn (£2.3bn) after tax, on operating profits of €3.5bn (£3bn), with high fares and premium leisure travel compensating for smaller numbers of business travellers.
The airline group said demand continued to be strong, despite the impact of a recession in the UK, although it did not expect a further significant rise in fares after large increases in 2023.
Luis Gallego, IAG’s chief executive, said: “We don’t see any weakness in the market.”
He said the group had last year “more than doubled its operating margin and profits compared with 2022, generated excellent free cashflow and strengthened its balance sheet position, recovering capacity to close to pre-Covid-19 levels in most of its core markets”.
British Airways, which retired its Boeing 747 jumbos during the pandemic, was flying at only 90% of its previous capacity, partly because of the continued weakness or closure of some destinations in Asia, but would return to near 2019 levels this year, with more frequencies on transatlantic routes.
IAG’s chief financial officer, Nicholas Cadbury, said: “With a good fare increase over the last year, right now we are looking at growing our capacity by about 7%. We’re seeing fares being sustained at the moment … So it’s good news, but our priority is to make sure we just fill in that additional capacity.
The British national carrier is also planning a £7bn overhaul over the next few years, including the purchase of new planes but also investing in updating its business-class seats, lounges and food. It is also revamping its IT systems after a series of high-profile problems in recent years.
Gallego said: “British Airways is our biggest asset with huge potential and that’s the reason we are investing.”
Meanwhile, IAG announced the appointment of new chief executives for British Airways’s Spanish sister airlines in the group, with the Vueling boss, Marco Sansavini, taking over at Iberia, replacing the interim chief, Fernando Candela, who moves to run Level, while a former British Airways director, Carolina Martinoli, takes over at Vueling.